The Fed should increase interest rates in the coming months if the economy picks up, Yellen said on Friday, bolstering the case for a rate hike in June or July.
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“We need a preponderance of USA data to beat expectations for rate hike expectations to increase”, said Greg Anderson, global head of FX strategy at BMO Capital Markets in NY.
Colin Cieszynski, senior market analyst at CMC Markets, said that momentum indicators for gold continue to point to lower prices.
WELLINGTON – The S&P/NZX 50 Index rose 27.09 points, or 0.4 per cent, to 7,019.64.
HONG KONG (AP) – Global stock markets rose modestly on Friday as the investment outlook remained uncertain ahead of US economic data and remarks by the head of the Federal Reserve.
The US Dollar strengthened in all major currency pairings following Fed Chair Yellen saying on Friday that it would be appropriate to increase rates “gradually and cautiously” in the coming months should the US economy and in particular the jobs market continue to strengthen as expected.
That has shifted market expectations that had been discounting higher rates until later in the year, with trading in federal funds futures on Thursday implying a 26 percent chance of an increase next month and 56 percent in July.
St. Louis Fed President James Bullard said yesterday that global markets appear to be “well-prepared” for a summer rate hike, although he did not specify a date for the policy move.
The euro wallowed at 2-1/2 month lows, edging down 0.1 percent to $1.1107. The dollar also fetched a one-month high of 111.455 yenon Monday before stepping back to around 111.09 yen, nearly 6 yen higher than a 1-1/2-year low struck earlier in the month against the Japanese currency.
The likelihood and timing of any decision by the Fed to raise interest rates is closely watched by investors around the globe, as well as in the U.S.
But she also, in her time-honoured fashion, soothed frayed investor nerves over any quick dash for a June rate hike.
The ISM manufacturing report and jobs data for May are due Wednesday and Friday, respectively.
Economists expect U.S. employers to have added 170,000 jobs in May, slightly more than they did in April, and hourly wages to show a 0.2% increase from the previous month.
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ASIA’S DAY: Japan’s benchmark Nikkei 225 index added 0.4 percent to 16,834.84 and South Korea’s Kospi gained 0.6 percent to 1,969.17. USA crude was up 0.55 percent at $49.60. Spot gold climbed 0.7 percent to 1,213.00 per ounce, but was headed for a slide of 6.2 percent for the month. It plumbed a low of $1,199.60 earlier in the session, its lowest since late February.
